Computing the issue price of bonds. Compute the issue price of each of the following bonds. a.

Question:

Computing the issue price of bonds. Compute the issue price of each of the following bonds.

a. $1,000,000 face value, zero coupon bonds due in 20 years, priced on the market to yield 10% compounded semiannually.

b. $1,000,000 face value, serial bonds repayable in equal semiannual installments of $50,000 for 20 years, priced on the market to yield 6% compounded semiannually.

c. $1,000,000 face value, 10% semiannual coupon bonds with interest payable each six months and the principal due in 20 years, priced on the market to yield 8% compounded semiannually.

d. $1,000,000 face value semiannual coupon bonds, with an annual coupon rate of 6% for the first ten years and 8% for the second ten years and the principal due in 20 years, priced on the market to yield 10% compounded semiannually.

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...